Who signs up to the UN PRI? Evidence from the worlds largest institutional investors

This chapter provides new evidence concerning the incentives faced by globally large asset owners and asset management organisations to become signatories of the UN-sponsored Principles for Responsible Investment (PRI). Together, these are the globally largest institutional investors, whose equity investment portfolios influence a substantial proportion of global carbon emissions. PRI signatory status is an indication of a commitment to responsible investment practices. However, whereas asset managers are primarily accountable to their clients for achieving short-term performance, asset owners have a fiduciary responsibility to act in the longer-term interests of their members and beneficiaries. We predict and find that asset managers therefore face different incentives to sign up to the PRI than asset owners. Globally large asset managers are more likely than asset owners to join up to the PRI. Asset owners who sign up to the PRI are also likely to engage with climate change through TCFD reporting and membership of Climate Action 100+. By contrast, European-based asset owners, who face more stringent reporting and ethical responsibility standards, are more likely to sign up to the PRI. The findings highlight the different legitimation versus institutional-based accountability factors incentivising globally large asset managers and asset owners to become PRI signatories.